Renzi's Italian job just got tougher

Amid record debt figures, instability caused by the Greek crisis, an immigration nightmare, chaotic EU rules, and a staggering new corruption scandal in Rome, Italy's Prime Minister Renzi has his work cut out, but he's still the future

It had to happen eventually; Italy’s popular and hyperactive Prime Minister, Matteo Renzi, has run into a spot of bother. His Democratic Party (PD) lost ground in the recent regional elections to the centre right (prop. S.Berlusconi). Now in local council elections they have sunk back even further.

The PD lost Arezzo in Tuscany and, for the first time in more than 20 years, Venice, whose communist former mayor, Massimo Cacciari, was said to have had an affair with Berlusconi’s ex.wife. Beppe Grillo’s 5-Star Movement, seen by some as an alternative to the Democratic Party, also did well.

It is unfortunate timing. Renzi knows that the markets, braced for an upheaval from Greece, are keeping a close eye on him, and that they will have taken note of the weakened political stability. They will also have seen the newly published debt figures, a record high at €2.2 trillion and clearly unsustainable, which is what they are saying about Greece.

Berlusconi is cock-a-hoop. ‘They had left us for dead’ he crowed, although anyone who writes off Silvio before he is six feet under, the body certified by independent witnesses, does not know Italian politics.

The Government’s problem is that for the ordinary guy in the street nothing much has changed. He reads about the new legislation that has been passed but he doesn’t feel it in his pocket. Unemployment is still 12.5 percent, double Britain’s rate.

Unfortunately Renzi’s bubbly enthusiasm created false expectations among the people, who want to see something happening. The demise of both his predecessors, Letta and Monti, was caused by their own failure to achieve.

So it is time for a renaissance. The laborious passing of the elections legislation, which caused a lot of discontent and rather knocked the stuffing out of parliament, is history. Renzi now has the option to go to the country any time between July 2016 and March 2018. He will want to do it before Berlusconi reforms the centre right into a united fighting force.

Renzi says he wants to revert to Renzi 1, the successor to which spent time hammering out boring inter party deals. Renzi 1 is optimism and change. He has identified three areas to work on: immigration, corruption and the economy.

First priority is immigration. Here, many, perhaps most, people are horrified at immigration levels and the immigrants’ failure to integrate. In addition, they believe that the rest of the EU should be doing more to help, by taking migrant quotas and establishing an emigration processing centre in Libya.

This last seems an excellent idea provided there is the political will to return those boat people who have not been processed. This seems unlikely.

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Unfortunately, in the world of grubby horsetrading which defines EU protocol, solidarity and Schengen are only skin deep. A hundred or so migrants made their way up through Italy to Ventimiglia, on the Mediterranean coast border with France, near the wealthy French Riviera. The French promptly closed the border.

The French interior ministry claim that the rule governing these poor people is not Schengen but the Dublin protocol, which says that refugees should be processed in the country they arrived in. This is great news for, say, Austria, where they would have had to parachute in to arrive there first.

Unfortunately France seems less keen to apply this when it comes to migrants trying to leave France for Britain.

In EU bartering you must expect some wins and some losses, but Renzi, who has had notable wins including getting Federica Mogherini as EU Foreign Minister, is perceived as looking weak here, where the anti-immigration Northern League look strong.

So, it is time for Plan B, which is dramatic. Renzi is threatening to give each refugee a temporary visa -- some 40,000 of them -- so their papers are in order and the French and Austrians can’t stop their passage.

As to corruption, Italians are used to it, but many have been truly horrified by stories of a home grown mafia in the local government of Rome. More than 40 people have been arrested, many of them prominent politicians. There will have to be a cleaning of this stable and Renzi has already made threats to the mayor, Ignazio Marino.

With the economy he needs a bit of luck: Europe to reflate, tax revenues to pick up. And it will be this, if anything, which delays the election.

But even against some fearsome opponents, the smart money is on Renzi winning. He is young, he is the future.

Tim Hedges, The Commentator's Italy Correspondent, had a career in corporate finance before moving to Rome where he works as a freelance writer, novelist, and farmer. You can read more of his articles about Italy here